As the economy spirals downward, people are looking for the cause. Not surprisingly, the Democrats and Republicans are blaming each other and they are both blaming the usual suspects: Washington, greed, the financial fat cats and so on. They both seem to be quite right.
While I am not an economist, the basic situation of the economy is on par with the general situation of society. I am qualified to comment on that, thanks to my background in political philosophy and political science.
Thinkers such as Aristotle, Hobbes and Plato have carefully considered what is needed to have a good society (and hence a good economy). For Aristotle and Plato, the key was to make people good. Aristotle was quite clear about what to do with people who did not become good-they would be compelled to act that way or forced into exile. Hobbes took what many regard as a more practical and realistic approach. He regarded humans as egoists looking out solely for their own good. Hence, people have to be compelled by force in order to behave in a way fit for society. Presumably the same applies to economic behavior as well. After all, if people are selfish and badly behaved in general, it would be odd if they were not so inclined when it came to economic matters.
The Republicans (to use the stereotype) seem to get Hobbes view when it comes to personal matters. They generally believe that individuals need to be compelled by the state when it comes to same sex marriage, abortion and drugs. They also seem to get his view when it comes to social order: they support harsh laws against certain crimes, capital punishment and the use of force against other nations. However, their reason seems to fail when it comes to the economy. While they see it as critical for the state to protect us from the devastating impact of same-sex marriage, the general view is that business should be left alone and this will work out great. This strikes me as odd. After all, if people need to be compelled by the state to behave well, then this should apply to business behavior as well.
Some people might point to the power of the invisible hand, an invention of Adam Smith. However, this wonderful invisible hand is invisible for the same reason that a unicorn is invisible-neither exist. The historical evidence is quite clear and hardly surprising: when people are not restricted by proper rules, they tend to try to get away with as much as they can. This also applies to business. Actually, it applies especially to business because the goal is to acquire wealth and this tends to lead to not-so-nice behavior even in the best of times.
I do wonder whether conservatives delude themselves about the magical invisible hand of business or whether they use it as a convenient excuse so they can try to get away with what they want to do. However, the logic is clear: if people need to be regulated by the state because otherwise they would act badly, then this applies to business behavior as well. Unless, of course, it can be shown that business is a special exception and that people act well and wisely without regulation. I think that the past problems and current disaster shows the truth about this matter.